Scale versus replication

Replication Versus Scale

I used to work for a healthcare tech company based out of San Francisco, and the word scale was almost a mantra. Whenever we did anything, from a small policy to the introduction of a new product or service, the question was always, will this scale? It is an important and crucial question for a growing organization. Before anything was introduced, we always considered the future, whether the new process would work if we had more customers, more covered lives, more emails, and more work. If the amount of effort, oversight, and individual contribution was too high, then we new we were not looking at something that would scale. We needed processes where the amount of additional work would be negligible as we grew, that was the key to scale.

 

For many organizations, however, scale isn’t necessarily the most important goal. Instead, the focus is on replication, to grow and expand in new spaces, new markets, and new products. Replication is something different than scale. While scale sought to reproduce the same outcome, the same process, and the same expectations in all settings, replication takes a slightly different approach to the same end goal. We still want the same successful outcome, but the goal doesn’t include having mirrored consistency in approach with diminishing marginal effort for each new customer. Replication is adaptable to changing local conditions.

 

Dave Chase describes it like this in his book The Opioid Crisis Wake-Up Call, “Replication varies from application to application; scalability seeks to apply the same things everywhere. This distinction is a subtle but absolutely critical success factor.”

 

In retail, social media, and chain restaurants, scale is crucial. You want every coffee you order at Starbucks to be the same, regardless of whether you are at the first Starbucks in Pike Place, or a brand new Starbucks in a Las Vegas suburb. You want your eggplant Parmesan at Olive Garden to be the same today and next month, and social media companies want everyone to have the same account set-up and access settings so that it is easier to manage all the companies, individuals, and organizations that create accounts. Scale makes things consistent, reduces administrative burden, and keeps costs down.

 

Replication is more adaptable from region to region, setting to setting, and industry to industry. The goal might be very similar, say to reduce healthcare costs, but the organizations and spaces might vary dramatically, say from nursing homes to companies offering remote medical second opinions. What Chase argues is that many healthcare organizations shouldn’t get too caught up on scale, and should focus more on replication. Hospitals can learn from nursing homes and replicate the approaches they take to improve patient adherence to medication regimens, knowing that there is some overlap and some divergence in their patient populations. Health plans can replicate patient education models that hospitals find successful, even though the patient education from the health plan will take place in a different form and space.

 

Scale dictates what should be done to create exact copies of a process with diminishing marginal costs, but replication is necessary when dealing with multiple confounding variables in dynamic and ever changing spaces. Scale might be needed for economic success at national and multinational levels, but replication provides the flexibility and creativity needed for success when a cookie-cutter model can’t be followed.

Marginal Charity – An Opportunity for Big Business

Big businesses strive for efficiency. If something can be reduced, eliminated, streamlined, and automated then at some point it will be. Each tiny advantage can be huge at scale, and can mean the difference between growing and laying off employees. Flaunting success, hiding failure, and maximizing at the margins are standard business operating procedures, but they create a void that could be filled for companies to do meaningful things that can be viewed in a charitable light. In The Elephant in the Brain, Robin Hanson and Kevin Simler talk about “marginal charity” an idea that you can do something that economically doesn’t add much cost to your own life, only marginally diminishes your efficiency, but provides a big element of charity to the business you are already doing.

 

In the book, the authors consider a high rise apartment building. Say 10 floors is the height to shoot for in order to achieve maximum efficiency. There may be situations where adding one more floor would not increase the cost by a significant amount, but would reduce the efficiency that the building owners and property developers expect from the complex, especially if the final floor was developed to allow for more low-income/affordable housing. Adding this extra story doesn’t make sense in a pure efficiency model, but if you are trying to add a touch of charity to the business you are already engaged in as the developer, you can do a lot of good by providing many additional affordable housing units with little marginal cost to yourself.

 

Hanson and Simler write, “In terms of providing value to others, marginal charity is extremely efficient. It does a substantial amount of good for others at very little cost to oneself. (In other words, it has an incredible ROD [Return on Donation]).” Finding a way to add a little extra while taking away from your own individual efficiency may make the entire system a bit more equitable, and a bit more efficient as a whole. Small tweaks to how to do things and create the systems that shape our lives can help provide for greater long-term benefit even if they slightly limit what is possible for us now.

 

Since we are not all property developers, we won’t all have this type of chance to make a big difference through small actions in a business context. But we can think about marginal charity in our own lives and try to set up systems and structures that help us default toward charitable behavior. I don’t think this looks like donating a dollar to the thing the grocery store check-out system asks you to donate to (I’d recommend saving that money and making a single larger donation to a charity featured on GiveWell), but it may look like picking up bottles or trash along the street you already walk down every day. It may look like increasing your recurring donation by an additional $5. It may look like making personal choices that add a little extra cost, but reduce energy use, plastic use, or single use item consumption. We can think about charity on a marginal level, encourage others to do so, and that will help build a spirit of looking for those marginal charity wins. They may not change the world, but they might help set up a culture and system that will.